TIDMAYM
21 July 2010
Anglesey Mining plc LSE:AYM
Announcement of annual results
A UK mining company listed on the London Stock Exchange with -
A 41% interest in Labrador Iron Mines Holdings Limited, a TSX quoted Canadian
company developing 150 million tons of direct shipping hematite iron ore near
Schefferville in Canada, with production due to commence later in 2010
100% of the Parys Mountain copper-lead-zinc project in North Wales with a total
historical resource of 7.76 million tonnes at 9.3% combined copper, lead and
zinc, held awaiting development
2010 - a special year - GBP8.2 million profit
"During the past year Labrador Iron has continued to develop its Labrador and
Quebec properties, increased its resources and completed a C$35 million
fund-raising. We are now poised to complete the construction and bring the
stage 1 deposits into production. Iron ore prices at very satisfactory levels
look set to continue for some time."
John Kearney - Chairman
"While our emphasis during the year has been very much on the Labrador
developments, Parys Mountain remains a significant asset, and one which we
would like to develop in co-operation with others."
Bill Hooley - Chief Executive
Chairman's Statement
This past year has been extremely satisfactory for Anglesey Mining plc. The
main project and major driver of shareholder value is the group's interest in
Labrador Iron Mines (LIM) where excellent progress has been made.
LIM successfully raised a further C$35 million in equity for its operations and
Anglesey raised GBP2.7 million through the sale of a small portion of its shares
in LIM. As a consequence of these fund raisings the group's interest in LIM is
now 41%, compared to its 50% interest at 31 March 2009 and the quoted market
value of the group's holding is GBP45 million at 6 July 2010 compared to GBP11
million at 31 March 2009.
The profit this year of GBP8.2 million results from the deemed disposal arising
on LIM's March 2010 placing in Toronto and the profit on sale of LIM shares.
Labrador Iron
Steady progress has been made in advancing the Schefferville Projects toward
production with ongoing active programmes in respect of drilling, metallurgical
testing, environmental, permitting, marketing, engineering and purchasing.
Since the last annual report we have -
acquired additional significant deposits in both Labrador and Quebec, including
some with potential for the extraction of manganese,
carried out a property exchange which rationalised our mineral holdings and
improved the potential of our iron ore deposits,
completed the environmental approval process for the stage 1 operations and
obtained project approval from the Government of Newfoundland and Labrador,
established new estimates of resources (NI 43-101 compliant) on the James,
Redmond and Houston deposits showing a significant increase in tonnage over the
historical resources,
carried out metallurgical testwork confirming the high iron content, low gangue
content and high quality of the ore to be produced in stage I of operations,
laid the 2.5 mile rail spur from the Sept-Îles - Schefferville main line to the
Silver Yards area where it is planned to install the beneficiation plant,
signed an agreement with the Sept-Îles Port Authority for the use of the port
to ship LIM's iron ore products.
In 2008, LIM and the Innu Nation of Labrador signed an Impact Benefit
Agreement. The Labrador Innu, as represented by the Innu Nation, are the only
aboriginal party with a land claim that has been accepted by the Government of
Newfoundland and Labrador. LIM has recently been in negotiations towards an
Impact Benefit Agreement with the Quebec Innu who claim Aboriginal rights in
the general Schefferville area but has not yet concluded an agreement.
Numerous permits and approvals have been received including the mining
leases for the first stage James and Redmond deposits, the surface use leases
over the Silver Yards beneficiation area and the camp. LIM is awaiting the
Certificate of Approval for the operation of the rail spur from the Government
of Newfoundland and Labrador. The receipt of these permits has taken longer
than anticipated, which has resulted in some delay in LIM's planned
construction and production timeline.
Upon receipt of all remaining necessary permits, licenses and approvals, and
the completion of the aboriginal agreements, LIM is planning to commence
construction of the mine and beneficiation facilities during the summer of 2010
and hopes to achieve start up and initial production before the seasonal shut
down of operations at the end of November 2010. LIM plans to commence full
scale commercial production in April 2011 and expects output of 2 million
tonnes of iron ore during that calendar year.
Marketing
LIM has not yet entered into agreements for the sale of any iron ore but it
anticipates that it will sell most of its early production into the spot
market. Iron ore prices grew strongly during the year and whilst there has been
some softening recently it is expected that these prices will continue to be
supported by robust Chinese demand.
Parys Mountain
During most of the year activities at Parys Mountain have been overshadowed by
the drive towards production in Labrador. We feel that the best route forward
for developing Parys Mountain would be with a partner. Efforts in this
direction will be increased in conjunction with limited technical programmes
designed to improve geological understanding on the Parys deposits and the
potential of the property, such as the computer-based geological remodelling
which was carried out over the past few months.
Financial
The fundraising by LIM resulted in the dilution of our stake in that company,
and the operation of accounting standards means that this dilution is treated
for accounting purposes as a 'deemed disposal' or partial sale; in addition
some of our shares were sold to raise funds for Anglesey. We have recorded
profits on the deemed and actual disposals of LIM shares of GBP8.8 million in the
year. After taking into account operating expenses and other items there was a
net profit for the year of GBP8.2 million. The Canadian dollar has strengthened
against the pound sterling during the year so we have for the second year
running recorded an exchange rate gain on our investment in LIM and this
together with the profits on sale mean that total shareholders' equity has
increased by more than GBP10 million during the year.
Outlook
The progress of the past year, together with high iron ore prices and a great
deal of market interest in iron ore generally, lead to the company's share
price peaking at 44 pence in April 2010. This is a dramatic improvement on the
price of 4.75 pence when the 2009 annual report was issued.
The stock market has been more than usually volatile and unpredictable over the
past few months following concerns that growth in the Chinese economy might be
weaker than previously anticipated. We remain confident that iron ore price
levels in 2011 will provide strong cashflows from the Labrador operations.
The short term objective is very clear: to put Labrador Iron Mines into
production. In the medium term we would like to move Parys Mountain forward,
preferably with an industry partner, and bring new projects into the group for
development.
John F. Kearney
Chairman
21 July 2010
The Schefferville Projects - Western Labrador and North-Eastern Quebec
The group has a 41% interest in Toronto-listed Labrador Iron Mines Holdings
Limited (LIM) which is now poised to begin mining direct shipping iron ore in
western Labrador near Schefferville, Quebec.
The Schefferville Projects are located in the west-central part of the Labrador
Trough iron range, one of the major iron ore producing regions in the world,
and are divided into two separate portions, one within the Province of
Newfoundland and Labrador, and the other within the Province of Quebec, both
located near the town of Schefferville, Quebec.
The iron ore deposits forming the Schefferville Projects are predominantly
hematite ore and were part of the original Iron Ore Company of Canada
direct-shipping Schefferville operations conducted from 1954 to 1982.
A compliant resource of 25.7 million tonnes has now been estimated in the
James, Redmond and Houston deposits. The remaining seventeen deposits,
excluding James, Redmond and Houston, have a historical resource estimated at
approximately 125 million tons of direct shipping iron ore, based on work
carried out by IOC prior to the closure of its Schefferville operations in
1984. The historical estimate was prepared according to the standards used by
IOC and, while still considered relevant, is not compliant with NI 43-101.
The plans for the Schefferville Projects envision the mining of the deposits in
four stages. Stage 1 comprises the deposits closest to existing infrastructure,
the mining of which will be undertaken in two phases. The first phase will
involve mining of the James and Redmond deposits and the second phase the
Houston, Knob, Gill and Ruth deposits, all in Labrador, together with the
Denault, Star Creek and Malcolm deposits in Quebec.
The James deposit is accessible by existing gravel roads and is located
approximately 5 km southwest of the town of Schefferville. The Redmond deposit
is located approximately 12 km south of the James deposit and can be reached by
existing gravel roads. The Knob Lake deposit, located approximately 3 km
southwest of the town of Schefferville, and the Houston deposit, located
approximately 20 km southeast of Schefferville, can also be reached by existing
gravel roads.
During the mining of the stage 1 deposits, planning will be undertaken for the
future operation of the more distant deposits in stages 2, 3 and 4. As
currently envisioned stage 2 will comprise the Howse, Barney and other adjacent
deposits which are relatively close to existing infrastructure. The deposits of
stages 3 and 4 are more than 60 km from Schefferville and will require
substantial infrastructure investment.
The in-situ ore is estimated to contain around 56% to 58% iron and it is
expected that the beneficiation process will enhance the product grade to
approximately 65% iron and remove unwanted material; production will be coarse
lump ore (about 25%) and a finer sinter feed. These products will be
transported by the existing railroad systems to the port of Sept-Îles on the
St. Lawrence River for onward shipping, most likely to steel mills in Europe or
Asia. The whole operation will utilize well proven, relatively basic technology
and will closely reflect that previously carried out by IOC in the same general
location for almost thirty years from 1954 to 1982.
Mining operations
Mining and processing operations will be conducted for eight months per year
from April to November using conventional open pit mining methods employing
drilling and blasting operations at an anticipated initial rate of 6,000 tonnes
per day. The processing schedule is anticipated to be over a period of
approximately 212 days per year.
Following plant assembly, stockpiled ore will be fed to the plant to allow
commissioning to take place. As soon as a steady state condition has been
reached saleable product of both lump ore and sinter fines will be produced.
These will be loaded into leased rail cars that will be transported to a port
facility in Sept-Îles.
Transportation infrastructure
The 355 mile rail line between Schefferville and Sept-Iles has been in
continuous operation for over fifty years. Tshiuetin Rail Transportation Inc
("TSH"), a consortium of three local Aboriginal First Nations, owns and
operates the approximately 130 mile main line track between Schefferville and
Ross Bay Junction where it connects to IOC's railway which runs the remaining
225 miles to Sept-Iles. Some refurbishment of the rails, ties and culverts of
the TSH main line track will need to be carried out to enable it to
continuously carry large volumes of iron ore traffic. LIM will lease rail cars
and engines to transport its ore to Schefferville. The operation of the line is
subject to common carrier arrangements.
Ore will be shipped from the port of Sept-Îles on the North Shore of the Gulf
of St. Lawrence on the Atlantic Ocean. Sept-Îles is a large natural harbour,
more than 80 metres in depth, which is open to navigation year round, and is
the most important port for the shipment of iron ore in North America, serving
the Quebec and Labrador mining industry. Each year approximately 23 million
tonnes of merchandise is handled, comprised mainly of iron ore. It is an
international marine hub for major maritime routes between North America,
Europe and Asia, and nearly 80% of its merchandise traffic, mostly iron ore, is
destined for international markets.
First Nations
In July 2008, LIM and the Innu Nation of Labrador signed an impact benefit
agreement. The Labrador Innu, as represented by the Innu Nation, are the only
aboriginal party with a land claim that has been accepted by the Government of
Newfoundland and Labrador. LIM has recently been in negotiations towards an
impact benefit agreement with the Quebec Innu based in Quebec, one of four
First Nations who claim aboriginal rights in the general Schefferville area.
LIM respects the legitimate aspirations of all First Nations but believes that
negotiations on impact benefit agreements for mining projects should not be
side-tracked by larger land claim considerations between the Quebec Innu and
the Quebec and Labrador governments, where LIM has no say or ability to provide
solutions. LIM has indicated that it is ready to continue negotiations and is
currently in discussions with representatives of the Quebec Innu and with the
relevant governments.
Marketing
Marketing discussions have continued with potential end users and samples have
been dispatched to a number of steel mills and independent laboratories. These
discussions have indicated an encouraging level of interest in the LIM products
based on the metallurgical test results and analysis of the samples supplied.
The indicated high iron grades and the low level of impurities are important
and should ensure that both lump ore and sinter fines will be readily accepted
by a wide range of customers.
Chinese and other Far Eastern consumers are showing a growing interest in
seeking iron ore from Eastern Canada. The rapid development in Chinese demand
for iron ore, coupled with a desire by China to diversify from its traditional
sources of supply, has begun to make Eastern Canada a viable source for this
market. Discussions continue with a number of Chinese customers and importers
as well as a number of European producers.
LIM has not yet concluded any agreements for the sale of any iron ore.
Initially LIM anticipates that it will sell all its production into the spot
market and will utilize the services of a trading company for this process.
Quebec iron ore properties
During the year LIM established Schefferville Mines Inc ("SMI") to acquire
interests in mining rights in Quebec covering approximately 9,014 hectares
together with an exclusive operating interest in a mining lease covering about
2,816 hectares. These rights and interests are held subject to a royalty of $2
per tonne of iron ore produced from the properties.
A preliminary review of these properties has been completed and an initial
development plan generated and incorporated into the exploration plan. It is
expected that this will permit at least one deposit to be brought into
production in 2012, subject to receipt of satisfactory engineering,
environmental and other permits.
The introduction of these Quebec properties, particularly those close to the
town of Schefferville, will have a positive effect on the overall project
development plan as it will extend the life of stage 1 and will as a result
defer the time at which capital expenditure to reach the more distant phases 3
and 4 deposits needs to be made.
Manganese properties
The manganese properties in both Quebec and Labrador that were acquired in 2009
will also be the subject of exploration during 2010. It may be possible to
develop compliant resource estimates for one or two of these deposits in 2010
and dependent upon engineering, environmental approvals and permit releases
some manganese concentrate may be able to be produced by 2012.
Directors' Report
The directors have pleasure in submitting their report and the audited accounts
for the year ended 31 March 2010.
Principal activities and business review
The group's principal activities are the development of the Labrador iron
project in eastern Canada in which the group has a 41% interest, and the Parys
Mountain project in North Wales which is wholly owned.
Development of the Labrador properties is proceeding at an increased level. A
rail spur has been completed and equipment for mining and processing is ready
to be transported to site.
In March 2010 Labrador Iron completed an underwritten placing in Toronto for
C$35 million and as part of that placing Anglesey sold, for GBP2.7 million in
cash, 810,900 of the 18,600,000 LIM shares which it had previously held. These
transactions mean that both companies are now well-funded to carry out their
planned activities. The group recorded a profit of GBP8.8 million on these
transactions.
The group maintains its search for other mineral exploration and development
opportunities with renewed vigour following the fund-raisings mentioned above.
The aim of the group is to continue to develop and operate the Labrador
projects, to create value in the Parys Mountain property, including by
co-operative arrangements, and to actively engage in other mineral ventures
using the group's own resources together with such external investment and
finance as may be required.
Labrador Iron
The group has a 41% interest in Toronto-listed LIM which is developing direct
shipping iron ore operations in western Labrador and north-eastern Quebec near
Schefferville in Canada.
Progress
Steady progress has been made in advancing the Schefferville Projects toward
production with ongoing active programmes, including drilling, metallurgical
testing, environmental, permitting, marketing, engineering and purchasing.
Upon receipt of all remaining necessary permits, licenses, approvals and
re-established access to the site, LIM is planning to commence construction of
the mine and beneficiation facilities during the summer of 2010 and hopes to
achieve start up and initial production before the seasonal shut down of
operations at the end of November 2010. LIM plans to commence full scale
production in April 2011 and expects production of 2 million tonnes of iron ore
during that calendar year.
Drilling and testwork
A programme of reverse circulation drilling commenced at the beginning of June
2009 and was completed at the end of October 2009. The deposits tested comprise
the four deposits planned to be mined in the stage 1 plan, being James,
Redmond, Knob Lake and Houston, together with some limited drilling on the more
distant stage 2 Howse deposit.
The results of this testwork formed the basis for NI 43-101 compliant resource
estimates on the James and Redmond deposits reported in November 2009 and for
the Houston deposit reported in April 2010, totalling 25.7 million tonnes. The
new resource estimate for Houston showed a significant increase in tonnage over
the historical resources (not NI 43-101 compliant), previously estimated by the
Iron Ore Company of Canada prior to 1982.
Metallurgical testing
Metallurgical testwork continued during 2009 aimed at improving expected
recovery levels from all size fractions of mined material while maintaining
high iron and low impurity levels in the final product. The results and report
from that testwork on the James South samples indicate products will have a
high iron content of approximately 67% with favourably low content of
deleterious non-ferrous metals. The high iron content and low gangue content
indicate the high quality of these ores, and that they will be well accepted in
the European market.
Environmental and permitting work
In February 2010 the Schefferville Area Iron Ore Mine (the first phase of the
Schefferville Projects) was released from environmental assessment and received
project approval from the Government of Newfoundland and Labrador, subject to
terms and conditions which LIM believes are achievable within the planned
operating parameters. Subsequent phases and stages of the Schefferville
Projects will be subject to further environmental assessments by regulatory
authorities in Labrador.
All the applications and plans required for the operating permits, licenses and
regulatory approvals have been submitted. Many of these have now been approved,
including the construction permit for the Silver Yards Spur Line Railroad.
Construction of this spur line has been completed.
Mining leases for the James and Redmond properties have been received from the
Province of Newfoundland and Labrador. In addition surface use leases for all
those additional areas required for the construction and operation of the James
and Redmond stage of the Schefferville Projects, including the Silver Yards
beneficiation area and the rail spur line, have also been received.
An Environmental Protection Plan ("EPP") was approved by the Minister of
Environment and Conservation. The EPP addressed process effluent treatment and
monitoring procedures, settling pond design and operation for storm water and
pit dewatering discharges, as well as caribou monitoring and mitigation in the
vicinity of the Schefferville Projects.
Transportation infrastructure
LIM has continued to hold discussions with the relevant rail transportation
companies and port operators regarding providing the necessary levels of
service from 2010 onwards. There are a number of companies involved in these
discussions, some with inter-connecting interests.
In February 2010, LIM signed an agreement with the Sept-Îles Port Authority for
the use of the port to ship LIM's iron ore products. LIM agreed to a base fee
schedule with the Port Authority regarding wharfage fees for iron ore loading
for LIM's shipping operations beginning in mid 2010. Agreements with the
relevant rail companies or port operators for the transportation and handling
of the planned production of iron ore have not yet been concluded.
Planned site programme - summer 2010
A new programme of reverse circulation drilling and trenching is planned for
2010. This programme will target both extensions to existing resources in
Labrador previously drilled by LIM, other deposits in Labrador not previously
drilled by LIM but included in the IOC historical resources, as well as on a
number of the Quebec deposits and properties recently acquired by LIM.
A continuing programme of environmental baseline work will take place on those
deposits designated for the next phases and stages of the project. This will
include work on archaeology, terrestrial biology, wildlife (including fish),
hydrology and noise and air quality. Offsite metallurgical testwork to assist
in recovery of fine iron units as well as high silica material will continue.
Project construction
The first major construction activity has been the laying of the 2.5 mile rail
spur from the Sept-Îles to Schefferville main line to the Silver Yards area
where it is planned to install the beneficiation plant. The majority of the
rail hardware was assembled offsite into track panels to permit speedy
installation.
A contract has been signed with a Labrador City based contractor for the mining
and beneficiation activities. Once site access has been re-established a new
accommodation camp which has been built offsite will be brought to site and
assembled. At about the same time the mining contractor will be mobilised to
site to commence mining activities including stockpiling of iron ore ahead of
the crusher pad. A contract has also been signed for camp catering.
All of the items of the beneficiation plant have been ordered and manufacturing
has been completed. These items are now at railheads at Sept-Îles and at
Labrador City awaiting delivery to site. Some pre-assembly is taking place in
Labrador City. Final assembly on site, subject to receipt of permits and
licences, should take place in the middle of the summer.
Parys Mountain
The Parys Mountain property is the largest known base metal deposit in the
United Kingdom. A feasibility study carried out in 1991 identified a resource
of 6.5 million tonnes of zinc, copper and lead with small amounts of silver and
gold. This historic resource together with the White Rock JORC compliant
resource identified more recently amounts in aggregate to 7.8 million tonnes at
9.3% combined metals. The 1991 feasibility study demonstrated the technical and
economic viability of bringing the property into production at a rate of
350,000 tonnes per annum, producing zinc, copper and lead concentrates. However
there was limited development over the period from 1991 to 2003 chiefly due to
poor metal prices. Efforts to develop the property since then have been
frustrated by external factors unrelated to the property itself.
Activities during the year have been limited. Work on the geological modelling
of the Parys deposits was brought up to date and a new computer simulation
produced. A new geological report has been received and reviewed. Further
drilling has been recommended however no decision has yet been taken as to
whether to go forward; it is not planned to undertake any major programmes.
The directors considered the carrying value of the Parys Mountain property and
carried out an impairment review the detail of which is set out in note 10. The
review indicated that no impairment provision was required or justified.
Operation of the mine and the receipt of cashflows from it are dependent on
finance being available to fund the development of the property.
Dolaucothi
In addition to its other mineral assets, the group holds the Dolaucothi gold
property in South Wales. It is not the company's current intention to incur
significant expenditures on this property, however this situation will be kept
under review.
Other activities
Management continues to search for new properties suitable for development
within a relatively short time frame and within the financing capability likely
to be available to the group.
Performance
So far as the directors are aware, there are no standardised indicators which
can usefully be employed to gauge the performance of the group at this stage of
its development other than the performance of the parent company's listed
shares. The directors expect to be judged by their success in creating value
for shareholders.
The chief external factors affecting the ability of the group to move forward
are the availability of finance, levels of metal prices and exchange rates;
these and other factors are dealt with in the risks and uncertainties section
below.
Dividend
The group has no revenues and the directors are unable to recommend a dividend
(2009 - nil). Since the date of the accounts the activities of the group have
continued in accordance with the directors' expectations.
Financial position
The group has no revenues from the operation of its properties. The profit for
the year after tax was GBP8,204,337 (2009 - restated loss GBP573,203). Of this
profit GBP8,788,063 (2009 - nil) was attributable to the effects of the LIM
financing and to Anglesey's sale of part of its LIM shareholding, both of which
took place in March 2010 in Canada.
During the year there were no additions to fixed assets (2009 - nil) and
GBP175,994 was capitalised in respect of the development of the Parys Mountain
property (2009 - GBP192,189). The Labrador properties are held in an associated
company.
The group's cash position at 31 March 2009 was GBP2,766,074 (2009 - GBP150,431),
this significant increase from last year being due to the receipt of proceeds
from the sale of shares in LIM referred to above.
At 31 March 2010 the company had 153,158,051 ordinary shares in issue, 600,000
more than in 2009 as a result of the exercise of share options.
The directors believe that the group has adequate funding for its current and
proposed operations. Further finance may be required for any new mineral
properties which may be evaluated, engaged in or acquired; however such outlays
are at the discretion of the directors and would not be made unless finance was
available.
Risks and uncertainties
In conducting its business the group faces a number of risks and uncertainties
some of which have been described above in regard to particular projects.
However, there are also risks and uncertainties of a nature common to all
mineral projects and these are summarised below.
General mining risks
Actual results relating to, amongst other things, mineral reserves, mineral
resources, results of exploration, capital costs, mining production costs and
reclamation and post closure costs, could differ materially from those
currently anticipated by reason of factors such as changes in general economic
conditions and conditions in the financial markets, changes in demand and
prices for minerals that the group expects to produce, legislative,
environmental and other judicial, regulatory, political and competitive
developments in areas in which the group operates, technological and
operational difficulties encountered in connection with the group's activities,
labour relations matters, costs and changing foreign exchange rates and other
matters.
The mining industry is competitive in all of its phases. There is aggressive
competition within the mining industry for the discovery and acquisition of
properties considered to have commercial potential. The group faces strong
competition from other mining companies in connection with the acquisition and
retention of properties, mineral claims, leases and other mineral interests as
well as for the recruitment and retention of qualified employees and other
personnel.
Development and liquidity risk
The injection of GBP2.7 million into the UK operations from the sale of shares in
LIM will provide adequate funding for its current and proposed operations. As
well as this source of funds, the company has in the past and may in the future
rely upon share issues and/or on loans from its major shareholder Juno Limited.
Labrador Iron Mines Holdings Limited is believed to be fully funded for the
foreseeable future.
Exploration and development
Exploration for minerals and development of mining operations involve many
risks, many of which are outside the group's control. The group currently
operates in politically stable environments and hence is unlikely to be subject
to expropriation of its properties but exploration by its nature is looking
into the unknown or little known and unforeseen or unwanted results are always
possible.
Metal prices
The prices of metals fluctuate widely and are affected by many factors outside
the group's control. The relative prices of metals and future expectations for
such prices have a significant impact on the market sentiment for investment in
mining and mineral exploration companies. Metal price fluctuations may be
either exacerbated or mitigated by international currency fluctuations which
affect the actual amount which might be received by the group in sterling.
Foreign exchange
The activities of LIM are carried out in Canada; the group's interest in LIM is
carried in the group accounts on an equity basis and is affected by an exchange
rate risk. Operations at Parys Mountain are in the UK and exchange rate risks
are minor. Most of the cash balance at the year end was held in Canadian
dollars - see notes 17 and 24.
Permitting, environment and social
LIM does not currently have all of the operating permits required for the
Labrador Iron project. The directors believe that all required permits will be
obtainable although any delay in the issue of permits is likely to result in a
delay to the expected time of first production.
LIM conducts its operations in Labrador and Quebec, in areas which are subject
to conflicting First Nations land claims. There are a number of First Nations
peoples living in the Quebec-Labrador peninsula with overlapping claims to
treaty or asserted aboriginal land rights. Aboriginal claims to lands, and the
conflicting claims to traditional rights between aboriginal groups, may have an
impact on LIM's ability to develop the Schefferville Projects.
The group holds a planning permission for the development of the Parys Mountain
property but further consents will be required to carry out proposed activities
and these permits may be subject to various reclamation and operational
conditions.
Employees and personnel
The group is dependent on the services of a small number of key executives
including the chairman, chief executive and finance director. Due to the small
size of the group, the loss of these persons or the group's inability to
attract and retain additional highly skilled and experienced employees may
adversely affect its business or future operations.
Financial instruments
The group's use of financial instruments is not significant and is described in
note 24.
Directors
The names of the directors with biographical details are shown on the inside
rear cover. In accordance with the company's practice, John Kearney and Ian
Cuthbertson retire by rotation and, being eligible, offer themselves for
re-election. Since Danesh Varma has served for more than nine years as a
non-executive director, current corporate governance practice requires that he
be re-elected annually, and, being eligible, he is also proposed for
re-election.
The company maintains a directors' and officers' liability policy on normal
commercial terms which includes third party indemnity provisions. Unless
otherwise determined by ordinary resolution, the number of directors, other
than alternate directors, shall not be subject to any maximum, but shall not be
less than two. The powers of the directors are described in the Corporate
Governance Report.
With regard to the appointment and replacement of directors, the company is
governed by its Articles, the Combined Code, the Companies Acts and related
legislation. The Articles themselves may be amended by special resolution of
the shareholders. Under the Articles, any director appointed by the board
during the year must retire at the Annual General Meeting following his
appointment. In addition, the Articles require that one-third of the remaining
directors retire by rotation at each general meeting and seek re-appointment.
The company wishes to adopt new Articles following the implementation of the
Companies Act 2006 and a resolution to that effect will be proposed at the
forthcoming AGM. The provisions of the preceding paragraph are also included in
the new Articles.
Directors' interests in material contracts
Juno Limited (Juno), which is registered in Bermuda, holds 37.8% of the
company's ordinary share capital. The company has a controlling shareholder
agreement and working capital agreement with Juno. Advances made under the
working capital agreement are shown in note 19. Apart from interest charges and
an advance to the group of GBP100,000 in September 2009 (2008 - GBP200,000) there
were no transactions between the group and Juno or its group during the year.
An independent committee reviews and approves any transactions and potential
transactions with Juno. Danesh Varma is a director and, through his family
interests, a significant shareholder of Juno.
John Kearney is chairman and chief executive of Labrador Iron Mines Holdings
Limited (LIM), Bill Hooley is a director and chief operations officer and
Danesh Varma is chief financial officer. All three are shareholders of LIM, are
entitled to remuneration from LIM and have been granted options over the shares
of LIM. There are no transactions between LIM, the group and the company which
are required to be disclosed.
There are no other contracts of significance in which any director has or had
during the year a material interest.
Directors' shareholdings
The interests of the directors in the share capital of the company, all of
which are beneficial, are set out below:
6 July 2010 31 March 2010 31 March 2009
Director Number of Number of Number of Number of Number of Number
options ordinary options ordinary options of
shares shares ordinary
shares
John Kearney 5,400,000 - 5,400,000 - 5,400,000 -
Bill Hooley 2,900,000 100,000 2,900,000 100,000 2,900,000 100,000
Ian Cuthbertson 2,100,000 1,027,300 2,100,000 1,027,300 2,400,000 727,300
David Lean 700,000 - 700,000 - 700,000 -
Howard Miller 900,000 - 900,000 - 1,200,000 -
Roger Turner 1,100,000 - 1,100,000 - 1,100,000 -
Danesh Varma 1,400,000 - 1,400,000 - 1,400,000 -
Further details of directors' options are provided in the Directors'
Remuneration Report.
Substantial shareholders
At 6 July 2010 the following shareholders had advised the company of
interests in the issued ordinary share capital of the company, all of which are
directly held:
Name Number Percentage of
of shares share capital
Juno Limited 57,924,248 37.8%
Passport Special Opportunities Master Fund 26,525,000 17.3%
Morgan Stanley Securities Limited 10,652,000 7.0%
10,600,000 of the shares notified by Passport Special Opportunities Master Fund
were disclosed (under UKLA rules introduced on 1 June 09) in connection with a
swap. The directors believe that these 10,600,000 shares might also form part
of the Morgan Stanley Securities Limited disclosure.
Shares
Authority to allot shares
Under the Articles of Association, the company has authority to allot the
unissued shares of the company, and a resolution will be put to the AGM
granting authority to the directors to do so in respect of GBP510,000 of share
capital (representing 33% of the company's issued ordinary share capital at 6
July 2010). This will enable the directors to issue up to 51,000,000 ordinary
shares within five years of the date of the AGM. The directors have no present
intention of exercising this authority.
The directors would usually wish to allot any new share capital on a
pre-emptive basis, however in the light of the group's potential requirement to
raise further funds for the acquisition of new mineral ventures, other
activities and working capital, they believe that it is appropriate to have a
larger amount available for issue at their discretion without pre-emption than
is normal for larger listed companies. Accordingly a further resolution will be
put to the AGM to renew the directors' authority to allot shares in the company
for cash without pre-emption. In the case of allotments other than for rights
or other pre-emptive issues, it is proposed that such authority will be for up
to GBP382,000 of share capital being 38,200,000 ordinary shares, which is
equivalent to 25% of the issued ordinary share capital at 5H6 July 2010. Whilst
such authority is in excess of the 5% of existing issued ordinary share capital
which is commonly accepted for larger listed companies, it will provide
additional flexibility which the directors believe is in the best interests of
the group in its present circumstances. It is the directors' present intention
to renew this power each year.
Rights and obligations attaching to shares
The rights and obligations attaching to the ordinary and deferred shares are
set out in the Articles of Association. Details of the authorised and issued
share capital are shown in note 21.
Each ordinary share carries the right to one vote at general meetings of the
company. Holders of deferred shares, which are of negligible value, are not
entitled to attend, speak or vote at any general meeting of the company, nor
are they entitled to receive notice of general meetings.
Subject to the provisions of the Companies Acts, the rights attached to any
class may be varied with the consent of the holders of three-quarters in
nominal value of the issued shares of the class or with the sanction of an
extraordinary resolution passed at a separate general meeting of the holders of
the shares of the class.
There are no restrictions on the transfer of the company's shares.
Voting rights
Votes may be exercised at general meetings in relation to the business being
transacted either in person, by proxy or, in relation to corporate members, by
corporate representative. The Articles provide that forms of proxy shall be
submitted not less than 48 hours before the time appointed for holding the
meeting or adjourned meeting.
No member shall be entitled to vote at a general meeting or at a separate
meeting of the holders of any class of shares in the capital of the company,
either in person or by proxy, in respect of any share held by him unless all
monies presently payable by him in respect of that share have been paid.
Furthermore, no shareholder shall be entitled to attend or vote either
personally or by proxy at a general meeting or at a separate meeting of the
holders of that class of shares or on a poll if he has been served with a
notice after failing to provide the company with information concerning
interests in his shares required to be provided under the Companies Acts.
Shares held in uncertificated form
Subject to the provisions of the Uncertificated Securities Regulations 2001,
the Board may permit the holding of shares in any class of shares in
uncertificated form and the transfer of title to shares in that class by means
of a relevant system and may determine that any class of shares shall cease to
be a participating security.
Significant agreements and change of control
There are no agreements between the company and its directors or employees that
provide for compensation for loss of office or employment that may occur
because of a takeover bid. The company's share plans contain provisions
relating to a change of control. Outstanding awards and options would normally
vest and become exercisable on a change of control, subject to the satisfaction
of any performance conditions.
Employment, community, donations and environment
The group is an equal opportunity employer in all respects and aims for high
standards from and for its employees. It also aims to be a valued and
responsible member of the communities which it affects or operates in. Since
there are no revenues from operations, it is the group's general policy not to
make charitable or political donations and none were made during the year (2009
- nil).
The group, which for these purposes does not include LIM, is small and has no
operations; consequently its affect on the environment is very slight, being
limited to the operation of two small offices, where recycling and energy usage
minimisation are taken seriously and encouraged. It is not practical or useful
to quantify the effects of these measures.
Creditor payment policy
The group conducts its business on the normal trade credit terms of each of its
suppliers and tries to ensure that suppliers are paid in accordance with those
terms. The group's average creditor payment period at 31 March 2010 was 59 days
(2009 - 61 days).
Going concern
The directors have considered the business activities of the group as well as
its principal risks and uncertainties as set out in this report. Based on the
group's cash flow forecasts and projections, and after making due enquiry in
the light of current and anticipated economic conditions, the directors
consider that the group and company have adequate resources to continue in
business for the foreseeable future. For this reason, the going concern basis
continues to be adopted in the preparation of the financial statements.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial
statements. The directors are required to prepare the financial statements for
the group in accordance with International Financial Reporting Standards as
adopted by the European Union (IFRS-EU) and have also elected to prepare
financial statements for the company in accordance with IFRS-EU. Company law
requires the directors to prepare such financial statements in accordance with
IFRS-EU, the Companies Act 2006 and, in relation to the group financial
statements, Article 4 of the IAS Regulation.
International Accounting Standard 1 requires that financial statements present
fairly for each financial year the group's financial position, financial
performance and cash flows. This requires the faithful representation of the
effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and
expenses set out in the International Accounting Standards Board's 'Framework
for the Preparation and Presentation of Financial Statements'. In virtually all
circumstances, a fair presentation will be achieved by compliance with all
applicable International Financial Reporting Standards.
Directors are also required to:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides
relevant, reliable comparable and understandable information; and
provide additional disclosures when compliance with the specific requirements
in IFRS-EU is insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the entity's financial
position and financial performance.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
group, for safeguarding the assets, for taking reasonable steps for the
prevention and detection of fraud and other irregularities and for the
preparation of a directors' report and directors' remuneration report which
comply with the requirements of the Companies Act 2006.
The directors confirm that the financial statements have (a) been prepared in
accordance with applicable accounting standards; (b) give a true and fair view
of the results of the group and the assets, liabilities and financial position
of the group and the parent company; and (c) that the directors' report
includes a fair review of the development and performance of the business and
the position of the group and the parent company together with a description of
the principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of the group
website.
Auditors
Each of the directors in office at the date of the annual report confirms that
so far as they are aware there is no relevant audit information of which the
group's auditors are unaware and that each director has taken all of the steps
which they ought to have taken as directors in order to make themselves aware
of that information. This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies Act 2006.
A resolution to reappoint Mazars LLP as auditors and to authorise the directors
to fix their remuneration will be proposed at the annual general meeting.
Articles of Association
The company wishes to bring its Articles up to date following the
implementation of the provisions of the Companies Act 2006 and a resolution to
that effect will be proposed at the forthcoming AGM.
By order of the board
Ian Cuthbertson
Company Secretary
21 July 2010
Independent auditor's report to the members of Anglesey Mining plc
We have audited the financial statements of Anglesey Mining plc for the year
ended 31 March 2010 which comprise the Group Income Statement, the Group
Statement of Comprehensive Income, the Group and Company Statement of Financial
Position, the Group and Company Statement of Changes in Equity, the Group and
Company Statement of Cash Flows and the related notes. The financial reporting
framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view.
Our responsibility is to audit the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's (APB's)
Ethical Standards for Auditors. This report is made solely to the company's
members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company
and the company's members as a body for our audit work, for this report, or for
the opinions we have formed.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the APB's web-site at www.frc.org.uk/apb/scope/UKP.
Opinion on the financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group's
and of the parent company's affairs as at 31 March 2010 and of the group's
profit for the year then ended;
the group financial statements have been properly prepared in accordance with
IFRSs as adopted by the European Union;
the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements
of the Companies Act 2006 and, as regards the group financial statements,
Article 4 of the IAS Regulation.
Emphasis of matter
In forming our opinion, which is not qualified, we have considered the adequacy
of the disclosures in the financial statements concerning the valuation of
intangible assets (note 10) of GBP13,792,743 in the group financial statements
and the valuation of investment in subsidiary undertakings (note 13) of GBP
14,109,987 in the company financial statements.
The financial statements and related notes have been prepared based on the
validity of the following:
the successful development of Parys Mountain mineral property;
the raising of new finance to exploit mineral reserves; and
No adjustments have been made to the statement of financial position and
related notes to reflect changes to these assets' carrying values that might be
necessary should the above conditions not be met.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the part of the Directors' Remuneration Report to be audited has been properly
prepared in accordance with the Companies Act 2006; and
the information given in the Directors' Report for the financial year for which
the financial statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not visited
by us; or
the parent company financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
certain disclosures of directors' remuneration specified by law are not made;
or
we have not received all the information and explanations we require for our
audit.
Under the Listing Rules we are required to review:
the directors' statement in relation to going concern; and
the part of the Corporate Governance Statement relating to the company's
compliance with the nine provisions of the June 2008 Combined Code specified
for our review.
Richard Karmel
Senior statutory auditor
for and on behalf of Mazars LLP, Chartered Accountants (Statutory auditor)
Tower Bridge House, St. Katharine's Way, London, E1W 1DD
21 July 2010
Group income statement
All attributable to equity holders of the company
Notes Year ended Year ended
31 March 31 March 2009
2010 (restated)
All operations are continuing
Revenue - -
Expenses (253,684) (224,737)
Equity-settled employee benefits 22 (28,127) (271,112)
Share of (loss) of associate 14 (203,173) (698,258)
Gains on deemed disposals in associate 14 7,054,967 -
Profit on sale of shares in associate 14 1,733,096 -
Investment income 6 1,076 7,118
Finance costs 7 (99,818) (84,535)
Parys properties fair value adjustments 10 - 698,321
Profit/(loss) before tax 4 8,204,337 (573,203)
Tax 8 - -
Profit/(loss) for the period 8,204,337 (573,203)
Profit/(loss) per share
Basic - pence per share 9 5.4 p (0.4)p
Diluted - pence per share 9 5.3 p (0.4)p
Statement of comprehensive income
Profit/(loss) for the period 8,204,337 (573,203)
Other comprehensive income:
Translation differences on foreign operations 2,148,426 1,835,562
Total comprehensive income for the period 10,352,763 1,262,359
Statement of financial position of the group
31 March 2010 31 March 2009
Notes GBP GBP
Assets
Non-current assets
Mineral property development 10 13,792,743 13,616,749
Property, plant and equipment 11 204,687 204,687
Interest in associate 14 21,868,314 13,821,013
Deposit 15 120,574 119,549
35,986,318 27,761,998
Current assets
Other receivables 16 8,327 2,915
Cash and cash equivalents 17 2,766,074 150,431
2,774,401 153,346
Total assets 38,760,719 27,915,344
Liabilities
Current liabilities
Trade and other payables 18 (817,869) (608,682)
17 (817,869) (608,682)
Net current assets/(liabilities) 1,956,532 (455,336)
Non-current liabilities
Loan 19 (1,960,347) (1,760,529)
Long term provision 20 (42,000) (42,000)
(2,002,347) (1,802,529)
Total liabilities (2,820,216) (2,411,211)
Net assets 35,940,503 25,504,133
Equity
Share capital 21 7,042,414 7,036,414
Share premium 8,097,973 8,092,423
Currency translation reserve 3,981,270 1,832,844
Retained earnings 16,818,846 8,542,452
Total shareholders' equity 35,940,503 25,504,133
The financial statements of Anglesey Mining plc registered number 1849957 were
approved by the board of directors and authorised for issue on 21 July 2010,
and signed on its behalf by:
John F. Kearney, Chairman
Ian Cuthbertson, Finance Director
Statement of financial position of the company
Notes 31 March 31 March
2010 2009
GBP GBP
Assets
Non-current assets
Investments 13 14,109,987 14,081,396
14,109,987 14,081,396
Current assets
Other receivables 16 4,254 1,433
Cash and cash equivalents 17 7,201 149,110
11,455 150,543
Total Assets 14,121,442 14,231,939
Liabilities
Current liabilities
Trade and other payables 18 (166,365) (125,478)
(166,365) (125,478)
Net current (liabilities)/assets (154,910) 25,065
Non-current liabilities
Loan 19 (1,960,347) (1,760,529)
(1,960,347) (1,760,529)
Total liabilities (2,126,712) (1,886,007)
Net assets 11,994,730 12,345,932
Equity
Share capital 21 7,042,414 7,036,414
Share premium 8,097,973 8,092,423
Retained losses (3,145,657) (2,782,905)
Shareholders' equity 11,994,730 12,345,932
The financial statements of Anglesey Mining plc registered number 1849957 were
approved by the board of directors and authorised for issue on 21 July 2010,
and signed on its behalf by:
John F. Kearney, Chairman
Ian Cuthbertson, Finance Director
Statements of changes in equity
All attributable to equity holders of the company.
Group Share Share Currency Retained
capital premium translation earnings
reserve (restated) Total
GBP GBP GBP GBP GBP
Equity at 1 April 2008 7,036,414 8,092,423 (2,718) 8,229,110 23,355,229
Total comprehensive
income for the year:
(Loss) for the year - - - (573,203) (573,203)
Exchange differences on - - 1,835,562 - 1,835,562
translation of foreign holdings
Total comprehensive - - 1,835,562 (573,203) 1,262,359
income for the year
Equity-settled benefits credit: - - - 615,433 615,433
- associate
- company - - - 271,112 271,112
Equity at 31 March 2009 7,036,414 8,092,423 1,832,844 8,542,452 25,504,133
Total comprehensive
income for the year
Profit for the year - - - 8,204,337 8,204,337
Exchange differences on - - 2,148,426 - 2,148,426
translation of foreign holdings
Total comprehensive - - 2,148,426 8,204,337 10,352,763
income for the year
Shares issued for cash 6,000 6,000 - - 12,000
Share issue costs - (450) - - (450)
Equity-settled benefits credit: - - - 43,930 43,930
- associate
- company - - - 28,127 28,127
Equity at 31 March 2010 7,042,414 8,097,973 3,981,270 16,818,846 35,940,503
Company Share Share Accumulated
capital premium losses Total
GBP GBP GBP GBP
Equity at 1 April 2008 7,036,414 8,092,423 (3,170,014) 11,958,823
Total comprehensive
income for the year
Profit for the year - - 115,997 115,997
Total comprehensive - - 115,997 115,997
income for the year
Equity-settled benefits credit - - 271,112 271,112
Equity at 31 March 2009 7,036,414 8,092,423 (2,782,905) 12,345,932
Total comprehensive
income for the year
Loss for the year - - (390,879) (390,879)
Total comprehensive - - (390,879) (390,879)
income for the year
Shares issued for cash 6,000 6,000 - 12,000
Share issue costs - (450) - (450)
Equity-settled benefits credit - - 28,127 28,127
Equity at 31 March 2010 7,042,414 8,097,973 (3,145,657) 11,994,730
Statement of cash flows of the group
Notes Year ended Year ended
31 March 31 March
2010 2009
(restated)
GBP GBP
Operating activities
Profit/(loss) for the year 8,204,337 (573,203)
Adjustments for non-cash items:
Investment revenue 6 (1,076) (7,118)
Finance costs 7 99,818 84,535
Equity-settled employee benefits 28,127 271,112
Share of loss of associate 14 203,173 698,258
Gain on deemed disposal in associate 14 (7,054,967) -
Profit on sale of shares in associate 14 (1,733,096) -
Parys properties fair value adjustments - (698,321)
(253,684) (224,737)
Movements in working capital
(Increase)/decrease in receivables (5,412) 22,775
Increase in payables 209,187 122,122
Cash utilised by operations (49,909) (79,840)
Interest paid - -
Net cash used in operating activities (49,909) (79,840)
Investing activities
Interest received 6 51 4,492
Net proceeds from sale of shares in associate 14 2,729,945 -
Mineral property development 10 (175,994) (192,189)
Net cash received/(used) in investing activities 2,554,002 (187,697)
Financing activities
Proceeds from issue of shares 11,550 -
Loans 100,000 200,000
Net cash generated from financing activities 111,550 200,000
Net increase/(decrease) in cash and cash equivalents 2,615,643 (67,537)
Cash and cash equivalents at start of year 150,431 217,968
Cash and cash equivalents at end of year 17 2,766,074 150,431
Statement of cash flows of the company
Notes Year ended Year ended
31 March 31 March
2010 2009
GBP GBP
Operating activities
(Loss)/profit for the year 23 (390,879) 115,997
Adjustments for non-cash items:
Investment revenue recognised in profit or loss (51) (4,400)
Finance costs recognised in profit or loss 99,818 84,535
Equity-settled benefits 28,127 271,112
Parys properties fair value adjustment - (698,321)
(262,985) (231,077)
Movements in working capital
(Increase)/decrease in receivables (2,821) 3,086
Increase in payables 40,887 65,659
Cash utilised by operations (224,919) (162,332)
Net cash used in operating activities (224,919) (162,332)
Investing activities
Interest received 51 4,400
Investments (28,591) (84,708)
Net cash used in investing activities (28,540) (80,308)
Financing activities
Proceeds from issue of shares 11,550 -
Loans 100,000 200,000
Net cash generated from financing activities 111,550 200,000
Net (decrease) in cash and cash equivalents (141,909) (42,640)
Cash and cash equivalents at start of year 149,110 191,750
Cash and cash equivalents at end of year 7,201 149,110
Notes to the accounts
1 General information
Anglesey Mining plc is domiciled and incorporated in the United Kingdom under
the Companies Act. The nature of the group's operations and its principal
activities are set out in note 3 and in the business review section of the
directors' report.
These financial statements are presented in pounds sterling because that is the
currency of the primary economic environment in which the group has been
operating. Foreign operations are included in accordance with the policies set
out in note 2.
2 Significant accounting policies
Basis of Accounting
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union and
therefore the group financial statements comply with Article 4 of the EU IAS
Regulation.
The financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are set out below.
Going concern
The financial statements are prepared on a going concern basis. The validity of
the going concern basis is dependent on finance being available for the
continuing working capital requirements of the group. For the reasons set out
in the directors' report, the directors believe that the going concern basis is
appropriate for these accounts.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the company and entities controlled by the company (its subsidiaries) made up
to 31 March each year. Control is achieved where the company has the power to
govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to profit and loss in the period of
acquisition. The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from the effective date
of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Revenue recognition
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the rates
of exchange prevailing on the dates of the transactions. At the end of each
reporting period, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing on the period end
date. Non-monetary assets and liabilities carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at the
date when the fair value was determined. Gains and losses arising on
retranslation are included in net profit or loss for the period, except for
exchange differences arising on non-monetary assets and liabilities where the
changes in fair value are recognised directly in equity.
On consolidation, the assets and liabilities of the group's overseas operations
are translated at exchange rates prevailing on the period end date. Exchange
differences arising, if any, are classified as equity and transferred to the
group's translation reserve. Such translation differences are recognised as
income or as expense in the period in which the operation is disposed.
Segmental analysis
The group has adopted IFRS 8 with effect from 1 April 2009. This sets out the
disclosure requirements concerning an entity's operating segments, products,
services, geographical areas in which it operates and its major customers and
replaces IAS 14, Segmental Reporting. IFRS 8 requires operating segments to be
identified on the basis of internal reports about components of the group that
are regularly reviewed by the chief operating decision-maker.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due. There are no defined benefit retirement schemes.
Equity-settled employee benefits
The group provides equity-settled benefits to certain employees. Equity-settled
employee benefits are measured at fair value at the date of grant. The fair
value determined at the grant date is expensed on a straight-line basis over
the vesting period, based on the group's estimate of shares that will
eventually vest and adjusted for the effect of non-market based vesting
conditions.
Fair value is measured by use of a Black-Scholes model. The expected life used
in the model has been adjusted from the longer historical average life, based
on directors' estimates of the effects of non-transferability, exercise
restrictions, market conditions, age of recipients and behavioural
considerations.
Taxation
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the period end liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of any deferred tax assets is reviewed at each period end
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Property, plant and equipment
The group's freehold land is stated in the statement of financial position at
cost. The directors consider that the estimated residual value of buildings,
based on prices prevailing at the date of acquisition, is such that any
depreciation would not be material. The carrying value is reviewed annually and
any impairment in value would be charged immediately to the income statement.
Plant, equipment, fixtures and motor vehicles are stated in the statement of
financial position at cost, less depreciation. Depreciation is charged on a
straight line basis at the following annual rates: plant and equipment 25%,
fixtures and fittings 20% and motor vehicles 25%. Residual values and the
useful lives of these assets are also reviewed annually.
Intangible assets - mineral property development costs
Intangible assets are stated in the statement of financial position at cost,
less amounts written off and provisions for impairment.
Costs incurred prior to obtaining the legal rights to explore a mineral
property are expensed immediately to the income statement. Mineral property
development costs are capitalised until the results of the projects, which are
usually based on geographical areas, are known. Mineral property development
costs include an allocation of administrative and management costs as
determined appropriate to the project by management.
Where a project is successful, the related exploration costs are written off
over the life of the estimated mineral reserve on a unit of production basis.
Where a project is terminated, the related exploration costs are written off
immediately. Where no internally-generated intangible asset can be recognised,
development expenditure is recognised as an expense in the period in which it
is incurred.
Impairment of tangible and intangible assets
Mineral properties are written down when any impairment in their value has
occurred and are written off when abandoned. Where a provision is made or
reversed it is dealt with in the income statement in the period in which it
arises.
Investment in associates
An associate is an entity over which the group exercises, or is in a position
to exercise, significant influence, but not control or joint control, through
participation in the financial or operating policy of the investee. In
considering the degree of control, any options or warrants over ordinary shares
which are capable of being exercised at the period end are taken into
consideration.
Where material, the results and assets and liabilities of associates are
incorporated in the financial statements using the equity method of accounting,
except when these associates are classified as held for sale. Investments in
associates are carried in the statement of financial position at cost adjusted
by any material post-acquisition changes in the net assets of the associates,
less any impairment of value in the individual investments.
Investments
Investments in subsidiaries are shown at cost less provisions for impairment in
value. Income from investments in subsidiaries together with any related
withholding tax is recognised in the income statement in the period in which it
is recoverable.
Provisions
Provisions are recognised when the group has a present obligation as a result
of a past event and it is probable that the group will be required to settle
that obligation. Provisions are measured at the directors' best estimate of the
expenditure required to settle that obligation at the end of the reporting
period and are discounted to present value where the effect is material.
Financial instruments
Financial assets and liabilities are initially recognised and subsequently
measured based on their classification as "loans and receivables" or "other
financial liabilities".
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
included in current assets, except where they mature more than 12 months after
the period end date: these are classified as non-current assets. The group's
loans and receivables comprise "deposits", "trade and other receivables" and
"cash and cash equivalents" in the statement of financial position.
(a) Trade and other receivables. Trade and other receivables are measured at
initial recognition at fair value and are subsequently measured at amortised
cost using the effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in the income statement when
there is objective evidence that the asset is impaired.
(b) Cash and cash equivalents. The group considers all highly liquid
investments which are readily convertible into known amounts of cash and have a
maturity of three months or less when acquired to be cash equivalents. The
management believes that the carrying amount of cash equivalents approximates
fair value because of the short maturity of these financial instruments.
(c) Trade and other payables. Trade payables are not interest bearing and are
stated at their fair value.
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received,
net of direct issue costs.
Cash flow statement
The cash flow statement is prepared by the indirect method set out in IAS 7 on
cash flow statements and presents cash flows by operating, investing and
financing activities.
New accounting standards
The group has adopted IFRS 8: Operating segments. The effect of this standard
is to disclose information concerning the group's reporting segments however
adoption of this standard did not materially change the analysis of the group's
results and performance.
The group and company adopted IAS1 (revised): Presentation of financial
statements. The effect of this standard is purely presentational, however under
this newly applied standard the prior year adjustment (see note 27) would
usually require an additional restated comparative statement of financial
position. Since there has been no change to the amounts and totals in any of
the statements of financial position, and the net adjustment is immaterial, no
additional comparative information as at 1 April 2008 has been shown.
Since 1 April 2009 the group has applied the following updated standards,
amendments and interpretations which have no significant impact on the
financial statements:
Amendment to IFRS 7 Improving Disclosures about Financial Instruments. The
amendment introduces a three-level hierarchy of the fair values of financial
instruments. The amendment also requires further information about the relative
reliability of fair values to facilitate the evaluation. In addition, the
amendment extends the presentation requirements of liquidity risk.
Amendments to IFRS 1 and IAS 27. Cost of investment in a subsidiary, jointly
controlled entity and associate.
The group and the company have not applied the following IFRS, IAS and IFRICs
that are applicable and have been issued but are not yet effective.
IFRS 9 Financial instruments, Classification and measurement, effective
for financial periods beginning on or after 1 January 2013
IAS 24 Related party disclosures. Revised definition of related parties
effective for financial years beginning on or after 1 January 2011
IAS 27 Consolidated and Separate Financial Statements - Consequential
amendments arising from amendments to IFRS 3, effective for financial years
beginning on or after 1 July 2009
IAS 28 Investments in Associates - Consequential amendments arising from
amendments to IFRS 3, effective for financial years beginning on or after 1
July 2009
The directors expect that the adoption of the above pronouncements will have no
material impact on the financial statements in the period of initial
application.
In addition to the above, there are a number of minor adjustments to various
standards which are part of the IASB's annual improvement project published in
April 2009. These amendments are not expected to have significant impact on the
group's accounts and are effective for financial years beginning on or after 1
January 2010.
There have been no other new or revised International Financial Reporting
Standards, International Accounting Standards or Interpretations that are in
effect since that last annual report that have a material impact on the
financial statements.
Judgements made in applying accounting policies and key sources of estimation
uncertainty
The following critical judgements have been made in the process of applying the
group's accounting policies:
(a) The directors' believe, after careful consideration, that the group does
not, as a matter of fact, control the activities and operations of Labrador
Iron Mines Holdings Limited (LIM), and that it is correctly accounted for on an
equity basis as an associate company.
(b) In determining the treatment of exploration, evaluation and development
expenditures the directors are required to make estimates and assumptions as to
future events and circumstances. There are uncertainties inherent in making
such assumptions, especially with regard to: ore resources and the life of a
mine; recovery rates; production costs; commodity prices and exchange rates.
Assumptions that are valid at the time of estimation may change significantly
as new information becomes available and changes in these assumptions may alter
the economic status of a mining unit and result in resources or reserves being
restated. Operation of a mine and the receipt of cashflows from it are
dependent on finance being available to fund the development of the property.
(c) In connection with possible impairment of assets the directors assess each
potentially cash generating unit annually to determine whether any indication
of impairment exists. The judgements made when doing so are similar to those
set out above and are subject to the same uncertainties.
Nature and purpose of equity reserves
The share premium reserve represents the consideration that has been received
in excess of the nominal value of shares on issue of new ordinary share
capital.
The currency translation reserve represents the revaluation of overseas foreign
subsidiaries and associates.
The retained earnings reserve represents profits and losses retained in
previous and the current period.
3 Segmental information
The group is engaged in the business of developing the Labrador iron project in
eastern Canada in which it has a 41% interest and the wholly-owned Parys
Mountain project in North Wales. Neither had any revenue generating operations
during the year. In the opinion of the directors, the group's activities
comprise one class of business at present. As a result, the group reports
geographical segments; these are the basis on which information is reported to
Bill Hooley, the chief executive and chief operating decision maker.
A proportion of the salary and corporate costs in the UK are in respect of
investigating other mineral development opportunities, however there are at
present no records which enable this proportion to be reliably measured.
Income statement analysis
2010 2009 - restated
Canada- Canada-
UK associate Total UK associate Total
GBP GBP GBP GBP GBP GBP
Expenses 253,684 - 253,684 224,737 - 224,737
Equity-settled 28,127 - 28,127 271,112 - 271,112
employee benefits
Share of loss - 203,173 203,173 - 698,258 698,258
in associate
Gain on deemed - (7,054,967) (7,054,967) - - -
disposals
Profit on sale of - (1,733,096) (1,733,096) - - -
shares in associate
Investment income (1,076) - (1,076) (7,118) - (7,118)
Finance costs 99,818 - 99,818 84,535 - 84,535
Parys properties - - - (698,321) - (698,321)
fair value adjustments
(Profit)/loss 380,553 (8,584,890) (8,204,337) (125,055) 698,258 573,203
for the year
Assets and liabilities
31 March 2010 31 March 2009
Canada- Canada-
associate Total UK associate Total
UK
GBP GBP GBP GBP GBP GBP
Assets 16,892,405 21,868,314 38,760,719 14,094,331 13,821,013 27,915,344
Liabilities (2,820,216) - (2,820,216) (2,411,211) - (2,411,211)
Net assets 14,072,189 21,868,314 35,940,503 11,683,120 13,821,013 25,504,133
4 Operating result
The operating result for the year has been arrived at after charging/
(crediting):
2010 2009
GBP GBP
Fees payable to the group's auditors:
for the audit of the annual accounts 29,870 55,580
for other services - tax services - 1,500
Directors' remuneration 93,940 56,406
Equity-settled employee benefits 28,127 271,112
Parys properties fair value adjustment - (698,321)
Audit fees for the subsidiaries are included in the fees paid in respect of the
company.
5 Staff costs
The average monthly number of persons employed (including executive directors)
was:
2010 2009
Technical - 1
Administrative 3 3
3 4
Their aggregate remuneration was:
GBP GBP
Wages and salaries 95,890 189,870
Social security costs 25,562 7,151
Other pension costs 10,320 10,000
131,772 207,021
Details of directors' remuneration and share options are given in the
directors' remuneration report.
6 Investment income
2010 2009
GBP GBP
Loans and receivables
Interest on bank deposits 51 4,492
Interest on site re-instatement deposit 1,025 2,626
1,076 7,118
7 Finance costs
2010 2009
Loans and payables GBP GBP
Loan interest to Juno Limited 99,818 84,535
8 Taxation
Activity during the year has generated trading losses for taxation purposes
which may be offset against investment income and other revenues. Accordingly
no provision has been made for Corporation Tax. There is an unrecognised
deferred tax asset at 31 March 2010 of GBP1.5 million (2009 - GBP1.4 million)
which, in view of the group's trading results, is not considered by the
directors to be recoverable in the short term. There are also capital
allowances, including mineral extraction allowances, of GBP11.2 million unclaimed
and available at 31 March 2010 (2009 - GBP10.7 million).
2010 2009
restated
GBP GBP
Current tax - -
Deferred tax - -
Total tax - -
Domestic income tax is calculated at 28% (2009 - 28%) of the
estimated assessed profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the
relevant jurisdictions.
The total charge for the year can be reconciled to the
accounting profit or loss as follows:
Profit/(loss) for the year 8,204,337 (573,203)
Tax at the domestic income tax rate of 28% 2,297,214 (160,497)
Tax effect of:
Expenses that are not deductible 7,955 108,921
in determining taxable result
Fair value adjustment not subject to tax - (195,530)
Gains on deemed disposals in associate (1,975,391) -
Profit on sale of shares in associate (485,267) -
Share of loss of associate 56,888 195,512
Tax losses for which no deferred tax asset 98,601 51,594
was recognised
Total tax - -
9 Earnings per ordinary share
2010 2009
restated
GBP GBP
Earnings
Profit/(loss) for the year 8,204,337 (573,203)
Number of shares
Weighted average number of ordinary shares for the purposes 152,845,722 152,558,051
of basic earnings per share
Shares deemed to be issued for no consideration in respect 3,111,816 -
of employee options
Weighted average number of ordinary shares for the purposes 155,957,538 152,558,051
of diluted earnings per share
Basic earnings per share 5.4p (0.4)p
Diluted earnings per share 5.3p (0.4)p
In 2009 the effect of the outstanding share options was anti-dilutive.
10 Mineral property development costs - group
Parys Dolaucothi Total
Mountain
Cost GBP GBP GBP
At 1 April 2008 - 194,065 194,065
Additions - own expenditure 192,189 - 192,189
Reverse reclassification as 13,424,560 - 13,424,560
assets held for sale
At 31 March 2009 13,616,749 194,065 13,810,814
Additions - own expenditure 175,994 - 175,994
At 31 March 2010 13,792,743 194,065 13,986,808
Impairment provision
At 1 April 2008, 2009 and 2010 - (194,065) (194,065)
Carrying amount
Net book value 2010 13,792,743 - 13,792,743
Net book value 2009 13,616,749 - 13,616,749
Potential impairment of mineral properties
Accumulated development expenditure in respect of each project is carried in
the financial statements at cost, less an impairment provision where there are
grounds to believe that the discounted present value of the future cash flows
from the project is less than the carrying value or there are other reasons to
indicate that the carrying value is unsuitable. Each project or cash generating
unit is reviewed separately in order to make a determination of whether any
impairment of its value has occurred.
Parys Mountain
At Parys Mountain, impairment provisions were made over the financial years
2001 to 2003 in recognition of the decline in prices of the metals to be
produced from the mine. However in 2007 these provisions were reversed since
the result of re-estimating the discounted cash flows of the Parys Mountain
project was a value significantly higher than the carrying value. The basis for
these calculations was the directors' estimates of future metal prices (in
practice current spot prices were used) and capital and operating costs, and a
discount rate of 10% (which had also been used in the previous calculations
which gave rise to the impairment).
This year the directors carried out an impairment review with an effective date
of 12 March 2010. As in previous years, this review was based on an estimate of
discounted future cash flows from the development and operation of the Parys
Mountain project. The directors have used past experience and an assessment of
future conditions, together with external sources of information, to determine
the assumptions which were adopted in the preparation of a financial model used
to estimate the cashflows.
The key assumptions utilised were:
The mine will be developed largely as envisaged in the Kilborn Feasibility
Study prepared in 1991, except where management has determined otherwise.
All the resources, both historical (including inferred resources) and those
more recently estimated under JORC codes, will be developed and produced except
that the tonnage of those classified as inferred in the 1991 Feasibility Study
will be reduced by 20%.
Capital costs will be estimated at current costs when the expenditure is
planned to be incurred; neither revenues nor operating costs will take into
account any inflation.
The net present value is at 31 March 2010 and based on the assumption that mine
development commences three years after that date.
Base metal prices are based on the 27 month forward prices quoted on the London
Metal Exchange at 12 March 2010; the exchange rates used are those of the same
day; gold and silver prices are spot rates on 12 March 2010; these rates and
prices are tabulated below.
The following principal smelter terms have been estimated by the directors:
zinc $273 pt treatment with a basis price of $2,500 pt and a +9% / -6%
variance; copper $47 pt treatment, $0.47 pt produced refining charge, lead $230
pt.
The discount rate of 10% applied to future cashflows is one which reflects the
directors' current market assessment of the time value of money and any risk
factors which have not been adjusted already in the preparation of the
forecast.
Table of assumptions significantly affecting the discounted net present value
of Parys cashflows
Sensitivity
Parameter Value Unit Factor*
Zinc price $2,347 $/tonne 27 months forward -
Copper price $7,435 $/tonne 27 months forward -84%
Lead price $2,235 $/tonne 27 months forward -
Silver price $17.30 Spot -
Gold price $1,102 Spot -
Exchange rate GBP/$ 1.5163 LME rate 13 Mar 09 +75%
Capital expenditure +304%
Operating costs +127%
Discount rate 10% +134%
* The sensitivity factor is the percentage change in each specific assumption
which would, on its own, result in a net present value equal to the carrying
value of the intangible asset in the accounts. Where no factor is shown, there
is no change possible which would produce this result. All $ figures are in US
dollars.
Parys summary
The estimated net present value of the Parys Mountain project calculated by the
directors and based on their estimates of all the required parameters,
particularly those set out above, is US$138 million, equivalent to GBP91 million.
The carrying value of the Parys Mountain project is GBP13.7 million.
Estimates of the net present value of any project, and particularly one like
Parys Mountain, are always subject to many factors and wide margins of error.
The directors believe that the estimates and calculations supporting their
conclusions have been carefully considered and are a fair representation of the
projected financial performance of the project.
The calculations above have been repeated using the spot metal prices and
exchange rates of 6 July 2010 (major factors: exchange rate GBP/US$ 1.52, zinc
price $1,915 and copper price $6,485) and the net present value at 10% on this
basis was US$94 million, equivalent to GBP62 million. This reduction is largely
as a result of lower metal prices.
Based on the review set out above the directors have determined that no
impairment provision is required in the financial statements at 31 March 2010
in respect of the carrying value of the Parys property. Operation of the mine
and the receipt of cashflows from it are dependent on finance being available
to fund the development of the property and if this were not the case
adjustments would have to be made to reduce the carrying value of the mineral
property development to its realisable value.
A Parys properties fair value adjustment of GBP698,321 made in relation to the
potential sale, which did not proceed, of the Parys Mountain project in the
statement of financial position and income statement for the year ended 31
March 2008 is no longer required or appropriate and has been reversed in the
year to 31 March 2009.
Dolaucothi impairment
The group has no active plans to develop the Dolaucothi project in the near
future and made a full impairment provision against the carrying value of the
Dolaucothi expenditure in 2006.
11 Property, plant and equipment
Group Freehold land and Plant & Office Total
property equipment equipment
Cost GBP GBP GBP GBP
At 1 April 2008 - - - -
Reverse reclassification as 204,687 17,434 5,487 227,608
held for sale
At 31 March 2009 and 2010 204,687 17,434 5,487 227,608
Depreciation
At 1 April 2008 - - - -
Reverse reclassification as - 17,434 5,487 22,921
held for sale
At 31 March 2009 and 2010 - 17,434 5,487 22,921
Carrying amount
At 31 March 2009 and 2010 204,687 - - 204,687
Company Freehold
land and Plant & Office
property equipment equipment Total
Cost GBP GBP GBP GBP
At 1 April 2008 - - - -
Reverse reclassification as held for sale - 17,434 5,487 22,921
Inter-company transfers (17,434) (5,487) (22,921)
At 31 March 2009 and 2010 - - - -
Depreciation
At 1 April 2008 - - - -
Reverse reclassification as held for sale - 17,434 5,487 22,921
Inter-company transfer - (17,434) (5,487) (22,921)
At 31 March 2009 and 2010 - - - -
Carrying amount
At 31 March 2009 and 2010 - - - -
12 Subsidiaries - company
The subsidiaries of the company at 31 March 2009 and 2010 were as follows:
Name of company Country of Percentage Principal activity
incorporation owned
Labrador Iron plc Isle of Man 100% Holder of the company's investment in Labrador Iron
Mines Holdings Limited, an associated company
Anglo Canadian England & 100% Holder of the Dolaucothi property
Exploration (Ace) Wales
Limited
Parys Mountain Mines England & 100% Development of the Parys Mountain mining property
Limited Wales
Parys Mountain Land England & 100% Holder of part of the Parys Mountain property
Limited Wales
Parys Mountain England & 100% Holder of part of the Parys Mountain property
Heritage Limited Wales
13 Investments - company
Shares at Amounts
cost due Total
GBP GBP GBP
At 1 April 2008 2 681,236 681,238
Added in year - 84,709 84,709
Reverse Parys properties fair value adjustment 698,321 698,321
Add back assets no longer classified as held for 100,101 12,517,027 12,617,128
sale
At 31 March 2009 100,103 13,981,293 14,081,396
Added in year - 28,591 28,591
At 31 March 2010 100,103 14,009,884 14,109,987
The realisation of investments is dependent on finance being available for
development and other factors as set out in more detail in note 10.
A Parys properties fair value adjustment of GBP698,321 made in relation to the
potential sale, which did not proceed, of the Parys Mountain project in the
statement of financial position and income statement for the year ended 31
March 2008 was reversed in the year to 31 March 2009.
14 Investment in associate
At 31 March 2010 the group had a 41% interest in Labrador Iron Mines Holdings
Limited (LIM), a company registered in Ontario Canada, which is independently
managed and is accounted for in these financial statements as an associate
company. LIM is the 100% owner and operator of a series of iron ore properties
in Labrador and Quebec, some of which were formerly held and initially explored
by the group. At 31 March 2009 the group's interest in LIM was 50.1%, however
following the issue of shares by LIM and the sale of 810,900 shares from the
company's total shareholding of 18,600,000 shares in LIM on 31 March 2010, the
interest in LIM was reduced to 41%. The fully diluted interest of the group in
LIM was 39% (2009 - 38%).
31 March 31 March
2010 2009
(restated)
GBP GBP
Values in group financial statements:
Value brought forward from previous year 13,821,013 12,068,276
Group's share of (losses), adjusted to eliminate any fair value uplift (203,173) (698,258)
and related taxation in associate's accounts
Group's share of equity-settled benefits included in (losses) above and 43,930 615,433
now added back
Profit on deemed disposals following LIM share issues 7,054,967
Less: carrying value of LIM shares sold (996,849)
Exchange rate adjustments 2,148,426 1,835,562
Amount carried in the group accounts - being the value of group's share 21,868,314 13,821,013
of net assets of the associate without any fair value adjustment in
respect of mineral properties
The group's interest in LIM is held in these financial statements at original
cost to the group, adjusted by material post-acquisition changes in the net
assets of the associate and any impairment of value in the individual
investments. It is adjusted to reflect the exchange rate current at the end of
the accounting period.
The profit on deemed disposal shown above is an adjustment to the group's
carrying value of the associate arising as a result of LIM's issues of new
shares, chiefly as part of a fundraising in March 2010, for a value of C$35
million. This dilutes the group's holding in LIM, however since the shares were
issued at a price per share which exceeds the group's carrying value, the
effect on the group's investment is beneficial and is represented by the
increase of GBP7,054,968 in the carrying value.
In March 2010 as part of the LIM fundraising, the company sold for cash 810,900
of the 18,600,000 LIM shares which it had previously held which resulted in a
profit calculated as follows:
GBP
Net proceeds of shares sold 2,729,945
Carrying value of shares sold 996,849
Profit on sale 1,733,096
The published fair value of the group's investment in LIM at 31 March 2010 is
GBP75 million (2009 - GBP11 million). This is derived by valuing the group's
shareholding in LIM at the LIM share price quoted in Toronto on 31 March 2010
of Canadian $6.50 (2009 - $1.05) per common share.
At 6 July 2010 the published fair value of the group's investment in LIM was GBP
45 million based on a share price of Canadian $4.06 per common share at that
date.
The directors have considered whether there has been any impairment to the
carrying value of the group's investment in LIM; in their opinion there is
none.
Values as shown in the published accounts of the associate (100%) including a
fair value uplift in respect of mineral properties, after conversion into
sterling:
31 March 31 March
2010 2009
GBP GBP
Total assets 136,829,785 100,048,329
Total liabilities (22,426,183) (20,699,563)
Total net assets 114,403,602 79,348,766
2010 2009
Revenues - -
Profit/(loss) for the year 668,641 (184,163)
Reconciliation of values shown in the associate's published accounts with the
group accounts
C$ C$
Shareholders' equity in associate $175,609,529 $140,923,409
Less: fair value uplift net of tax - see note below $(93,770,841) $(91,899,196)
$81,838,688 $49,024,213
Group share - 41.02% (2009 - 50.07%) $33,567,864 $24,546,121
Group carrying value after conversion to sterling GBP21,868,314 GBP13,821,013
In the financial statements of LIM the Labrador mineral properties are carried
at a fair value derived from the value ascribed to the Labrador companies in
the December 2007 Canadian flotation, after subsequent adjustments. If the
group were to use a similar basis for its accounts, its share of this fair
value uplift, net of tax, would add approximately GBP25 million (2009 - GBP26
million) to group net assets.
The associated undertakings of the group were as follows:
Name of company Country of Percentage Principal activity
incorporation owned
31 31
Mar Mar
10 09
Labrador Iron Mines Canada 41% 50.1% Holding company for
Holdings Limited (LIM) Labrador Iron Mines
Limited (100%)
Labrador Iron Mines Canada 41% 50.1% Development of iron
Limited, a 100% owned mines in Labrador
subsidiary of LIM
LabRail Inc, a 100% owned Canada 41% 50.1% Transport operations
subsidiary of LIM
Centre Ferro Ltd, a 100% Canada 41% 50.1% Property holding
owned subsidiary of LIM
Schefferville Mines Inc, Canada 41% - Development of iron
a 100% owned subsidiary mines in Quebec
of LIM
The group holds its interest in these associated companies through Labrador
Iron plc, a 100% owned subsidiary.
15 Deposit
Group Company
2010 2009 2010 2009
GBP GBP GBP GBP
Due from Isle of 120,574 119,549 - -
Anglesey County Council
This deposit was required and made under the terms of the group's Section 106
Agreement with the Isle of Anglesey County Council which has granted planning
permissions for mining at Parys Mountain.
16 Other receivables
Group Group Company Company
2010 2009 2010 2009
GBP GBP GBP GBP
Other 8,327 2,915 4,254 1,433
The carrying value of the receivables approximates to their fair value.
17 Cash
Group Group Company Company
2010 2009 2010 2009
GBP GBP GBP GBP
Held in sterling 10,070 150,431 7,201 149,110
Held in Canadian dollars 2,756,004 - - -
2,766,074 150,431 7,201 149,110
All of the Canadian dollar cash balance was received on 31 March 2010 and
consequently no foreign exchange difference arose in the year.
18 Trade and other payables
Group Group Company Company
2010 2009 2010 2009
GBP GBP GBP GBP
Trade creditors (42,971) (79,930) (42,443) (79,011)
Property royalties (613,665) (469,285) - -
and rentals
Other accruals (161,233) (59,467) (123,922) (46,467)
(817,869) (608,682) (166,365) (125,478)
The carrying value of the trade and other payables approximates to their fair
value.
19 Loan
Group Group Company Company
2010 2009 2010 2009
GBP GBP GBP GBP
Loan from Juno Limited (1,960,347) (1,760,529) (1,960,347) (1,760,529)
The loan from Juno Limited is provided under a working capital agreement,
denominated in sterling, unsecured and carries interest at 10% per annum. It is
repayable from any future financing undertaken by the company, or on demand
subject to 367 days notice. The terms of the facility were approved by an
independent committee of the board. The carrying value of the loan approximates
to its fair value.
20 Long term provision
Group Group Company Company
2010 2009 2010 2009
GBP GBP GBP GBP
Provision for (42,000) (42,000) - -
site reinstatement
The provision for site reinstatement covers the estimated costs of
reinstatement at the Parys Mountain site of the work done and changes made by
the group up to the date of the accounts. These costs would be payable on
completion of mining activities which is estimated to be in more than 20 years
time. There are uncertainties inherent in the assumptions made in estimating
the amount of this provision, which include judgements of changes to the legal
and regulatory framework, magnitude of possible contamination and the timing,
extent and costs of required restoration and rehabilitation activity.
21 Share capital
Ordinary shares of 1p Deferred shares of 4p Total
Nominal Nominal Nominal
value GBP Number value GBP Number value GBP
Authorised share capital
At 31 March 2008, 2009 & 2010 2,240,000 224,000,000 7,320,000 183,000,000 9,560,000
Issued and fully paid
At 1 April 2008 & 2009 1,525,581 152,558,051 5,510,833 137,770,835 7,036,414
Issued 23 April 2009 3,000 300,000 - - 3,000
Issued 23 March 2010 3,000 300,000 - - 3,000
At 31 March 2010 1,531,581 153,158,051 5,510,833 137,770,835 7,042,414
The deferred shares are non-voting, have no entitlement to dividends and have
negligible rights to return of capital on a winding up. The share issues in the
period followed upon the exercise of directors' share options.
22 Equity-settled employee benefits
Share option plan
The group plan provides for a grant price equal to or above the average quoted
market price of the ordinary shares for the three trading days prior to the
date of grant. The vesting period for options granted since 2004 has been one
year. If the options remain unexercised after a period of 10 years from the
date of grant, they expire. Options are forfeited if the employee leaves
employment with the group before the options vest.
2010 2009
Options Weighted Options Weighted
average average
exercise exercise
price in price in
pence pence
Outstanding at beginning of period 15,100,000 9.75 13,400,000 10.36
Granted during the period - - 1,700,000 5.00
Forfeited during the period - - - -
Exercised during the period 600,000 2.00 - -
Expired during the period - - - -
Outstanding at the end of the period 14,500,000 10.07 15,100,000 9.75
Exercisable at the end of the period 14,500,000 10.07 13,400,000 10.36
No options were granted during the year. Those granted in 2009 had a fair value
of 1.7 pence each. The options outstanding at 12H31 March 2010 had a weighted
average exercise price of 10.07 pence (2009 - 9.75 pence), and a weighted
average remaining contractual life of 6.1 years (2009 - 6.9 years).
The inputs into the Black-Scholes model in respect of options granted during
the year are as follows:
2010 2009
Weighted average share price in pence - 3.88
Weighted average exercise price in pence - 5.00
Expected volatility - 71%
Expected life - 3 years
Risk free rate - 5%
Expected dividends - None
Expected volatility was determined by calculating the historical volatility of
the share price over the previous three years. The expected life used in the
model has been adjusted from the longer historical average life, based on
directors' estimates of the effects of non-transferability, exercise
restrictions, market conditions, age of recipients and behavioural
considerations.
The group recognised total expenses of GBP28,127 (2009 - GBP271,112) in respect of
equity-settled employee remuneration during the year.
A summary of options granted and outstanding, all of which are over ordinary
shares of 1 penny, is as follows:
Scheme Number Nominal Exercise Exercisable Exercisable
Value GBP price from until
2004 Unapproved 6,700,000 67,000 4.13p 22 October 2004 21 October 2014
2004 Unapproved 2,100,000 21,000 10.625p 15 January 2007 14 January 2016
2004 Unapproved 4,000,000 40,000 21.9p 26 November 2008 26 November 2017
2004 Unapproved 1,700,000 17,000 5.00p 27 March 2010 27 March 2019
Total 14,500,000 145,000
23 Profit attributable to Anglesey Mining plc
The loss after taxation in the parent company amounted to GBP390,879 (2009-
profit -GBP115,997). The directors have taken advantage of the exemptions
available under section 408 of the Companies Act 2006 and not presented a
profit and loss account for the company alone.
24 Financial instruments
Capital risk management
The group manages its capital to ensure that entities in the group will be able
to continue as going concerns while optimising the debt and equity balance. The
capital structure of the group consists of debt, which includes the borrowings
disclosed in note 19, the cash and cash equivalents and equity comprising
issued capital, reserves and retained earnings.
The group does not enter into derivative or hedging transactions and it is the
group's policy that no trading in financial instruments be undertaken. The main
risks arising from the group's financial instruments are currency risk and
interest rate risk. The board reviews and agrees policies for managing each of
these risks and these are summarised below.
Interest rate risk
The group finances its operations through a mixture of loans from Juno Limited
and equity. The Juno loans are at a fixed rate of interest of 10% per annum and
as a result the group is not exposed to interest rate fluctuations.
Liquidity risk
The group's policy has been to ensure continuity of funding through a mixture
of issues of shares and the working capital agreement with Juno Limited. At the
end of this financial period the sale of shares in the group's associate LIM
also provided a source of funds.
Trade creditors are payable on normal credit terms which are usually 30 days.
The loans due to Juno carry a notice period of 367 days; in keeping with its
practice since drawdown commenced more than 10 years ago, Juno has indicated
that it has no current intention of demanding repayment and no such notice had
been received by 21 July 2010. However the Juno loan is classified as having a
maturity date between one and two years from the period end date.
Currency risk
The functional currency of the group is pounds sterling. The loan from Juno
Limited is denominated in pounds sterling. As a result, the group has no
currency exposure in respect of this loan.
At the year end the group held the proceeds from the sale of part of its LIM
shareholding, in the amount of C$4,230,465 in Canadian dollars, equivalent to GBP
2,756,004. If the rate of exchange between Canadian dollars and sterling were
to move against sterling by 10% there would be a loss to the group of GBP250,500
and if it were to move in favour of sterling by a similar amount there would be
a gain of GBP306,200.
Credit risk
The directors consider that the entity has limited exposure to credit risk as
the entity has immaterial receivable balances at the year end on which a third
party may default on its contractual obligations. The carrying amount of the
group's financial assets represents its maximum exposure to credit risk.
The financial instruments of the group and the company are:
Group
Loans & Other financial
receivables liabilities
31 March 31 March 31 March 31 March
2010 2009 2010 2009
GBP GBP GBP GBP
Financial assets
Deposit 120,574 119,549
Other debtors 8,327 2,915
Cash and cash 2,766,074 150,431
equivalents
Financial liabilities
Trade creditors (42,971) (79,930)
Loans due to Juno (1,960,347) (1,760,529)
2,894,975 272,895 (2,003,318) (1,840,459)
Company
Loans & Other financial
receivables liabilities
31 March 2010 31 March 2009 31 March 2010 31 March 2009
GBP GBP GBP GBP
Financial assets
Deposit - -
Other debtors 4,254 1,433
Cash and cash 7,201 149,110
equivalents
Financial liabilities
Trade creditors (42,443) (79,011)
Loans due to Juno (1,960,347) (1,760,529)
11,455 150,543 (2,002,790) (1,839,540)
All financial assets and liabilities are initially stated at fair value and
measured at amortised cost, and all carrying values approximate to fair values.
25 Related party transactions
Juno Limited
Juno Limited (Juno) which is registered in Bermuda holds 37.8% of the company's
issued ordinary share capital. The group has the following agreements with
Juno: (a) a controlling shareholder agreement dated September 1996 and (b) a
consolidated working capital agreement of 12 June 2002. Interest payable to
Juno is shown in note 7 and the balance due to Juno is shown in note 19. There
were no transactions between the group and Juno or its group during the year
other than a loan of GBP100,000 from Juno to the group and the accrual of
interest due to Juno. Danesh Varma is a director and, through his family
interests, a significant shareholder of Juno.
Labrador Iron
Labrador Iron Mines Holdings Limited (LIM) is a 41% held associate and
therefore a related party. During the year the parent company made no recharges
to LIM in respect of directors salaries as these were paid directly; last year
LIM was charged with GBP122,889 in respect of remuneration and associated social
security costs. There are no other transactions between LIM, the group and the
company which are required to be disclosed.
John Kearney is chairman of Labrador Iron Mines Holdings Limited (LIM), Bill
Hooley is a director and chief operations officer and Danesh Varma is chief
financial officer. All three are shareholders of LIM, are entitled to
remuneration from LIM and have been granted options over the shares of LIM
All key management personnel are directors and appropriate disclosure with
respect to them is made in the directors' remuneration report. There are no
other contracts of significance in which any director has or had during the
year a material interest.
26 Mineral holdings
Parys
(a) Most of the mineral resources delineated to date are under the western
portion of Parys Mountain, the freehold and minerals of which are owned by the
group. A royalty of 6% of net profits after deduction of capital allowances, as
defined for tax purposes, from production of freehold minerals is payable. The
mining rights over and under this area, and the leasehold area described in (b)
below, are held in the Parys Mountain Mines Limited subsidiary.
(b) Under a lease from Lord Anglesey dated December 2006, the subsidiary Parys
Mountain Land Limited holds the eastern part of Parys Mountain, formerly known
as the Mona Mine. An annual certain rent of GBP5,425 is payable for the year
beginning 23 March 2009; the base part of this rent increases to GBP10,000 in
2012 and to GBP20,000 when extraction of minerals at Parys Mountain commences;
all of these rental figures are index-linked. A royalty of 1.8% of net smelter
returns from mineral sales is also payable. The lease may be terminated at 12
months notice but not before 2012 and otherwise terminates in 2070.
(c) Under a mining lease from the Crown dated December 1991 there is an annual
lease payment of GBP5,000. A royalty of 4% of gross sales of gold and silver from
the lease area is also payable. The lease may be terminated at 12 months notice
and otherwise terminates in 2020.
(d) Under a royalty agreement with Intermine Limited the group is obligated to
make payments of C$50,000 (c.GBP32,500) per annum until production commences at
the Parys Mountain mine. A royalty of 4% of net profits (as defined after
various deductions) generated from production at the mine is also payable.
There is an option to buy out the royalty and advance payments. The agreement
may be terminated at 12 months notice on abandonment of the property. The group
has not paid all of the amounts due under this agreement and has made
settlement proposals to Intermine Limited but no understanding has yet been
reached. Intermine Limited holds a charge over the mining rights held by Parys
Mountain Mines Limited to secure the payment of royalties in respect of
minerals produced in the areas described in (a) and (b) above.
Dolaucothi
Under a mining lease from the Crown dated August 1997, a subsidiary, Anglo
Canadian Exploration (Ace) Limited, has an obligation to make annual lease
payments of GBP3,890 and to pay a royalty of 4% of gross sales of gold and silver
from production at the Dolaucothi mine. The lease may be terminated at 12
months notice and otherwise terminates in 2011. Certain financial obligations
relating to this lease have been guaranteed by the parent company.
27 Restatement of prior year results
In accounting for the results of its associate Labrador Iron Mines, the group
has historically recorded the share based payment expenses in LIM's income
statement in the same way as its own share based payments, in accordance with
IFRS 2. In 2008 and 2009 the group did not record certain other share based
payments which were capitalised by LIM to mineral property development expense,
and not charged in LIM's income statement.
Following a review of this treatment the directors decided that these share
based payments should be recorded as an expense in the group income statement.
As a result the losses of the associate for the year ended 31 March 2009 have
been increased by GBP444,189. This change has no net effect on the group's
interest in LIM but has lead only to a restatement of the associate's loss in
the income statement for that year and to restated basic and diluted earnings
per share of (0.4) pence, from (0.1) pence originally.
Since there has been no change to the amounts and totals in any of the
statements of financial position, and the net adjustment is immaterial, no
additional comparative information has been shown.
28 Material non cash transactions
There were no material non-cash transactions.
29 Commitments
Other than commitments under leases (note 26) there is no capital expenditure
authorised or contracted which is not provided for in these accounts (2009 -
nil).
30 Contingent liabilities
There are no contingent liabilities (2009 - nil).
31 Events after the period end
There are no post period end events to be disclosed.
Directors
Irish, aged 59, chairman, is a mining executive with more than 36
years experience in the mining industry and is chairman of the
John F. company's associate Labrador Iron Mines Holdings Limited. He is
Kearney also chairman of Canadian Zinc Corporation, Minco plc and Conquest
Resources Limited. He is a director of the Mining Association of
Canada and has degrees in law and economics from University College
Dublin and an MBA from Trinity College Dublin. He is a member of
the nomination committee and is resident in Canada.
Bill Hooley aged 63, chief executive, is a mining engineering graduate from the
Royal School of Mines and has extensive experience in many
countries including the UK and Australia. He is chief operating
officer and a director of the company's associate Labrador Iron
Mines Holdings Limited. He has been a director of a number of
companies involved in the minerals industry. He is a Fellow of the
Australasian Institute of Mining and Metallurgy.
Ian aged 63, finance director and company secretary, is a chartered
Cuthbertson accountant. He has extensive previous experience in the
international oilfield and construction industries and has been
secretary of the company since 1988.
Australian, aged 63, non-executive director, is a chartered
accountant. He has over 30 years experience in the commercial
David Lean aspects of the mining industry most of which was with major base
and precious metal mining houses. Currently he is involved in
trading mineral products. He is a member of the audit and
nomination committees.
Howard aged 66, non-executive director, a lawyer with over 40 years
Miller experience in the legal and mining finance sector in Africa, Canada
and the UK. He has extensive experience in the financing of
resource companies. He is chairman of Avnel Gold Mining Limited. He
is a member of the remuneration and nomination committees and the
senior independent director.
Roger aged 67, non-executive director, is a mining engineer with more
Turner than 40 years experience in engineering, management and project
development. He is a Camborne School of Mines graduate and has an
MSc in economic geology. He was previously President and CEO of
Nelson Gold Corporation and Oxus Gold plc.
Danesh Canadian, aged 60, non-executive director, is a chartered
Varma accountant and a member of the Chartered Institute of Taxation. He
is chief financial officer of the company's associate Labrador Iron
Mines Holdings Limited. He is also chief financial officer of Minco
plc, Xtierra Inc. and Conquest Resources Limited. He is a member of
the audit and remuneration committees.
Solicitors Auditors Bankers
DLA Piper UK LLP Mazars LLPTower Bridge House, HSBCDinorben Square
101 Barbirolli Square St. Katharine's Way, London Amlwch, Anglesey
Manchester E1W 1DD LL68 9AH
M2 3DL
Glossary
AGM - the annual general meeting to be held on 24 September 2010.
C$ - Canadian dollars. At 31 March 2010 GBP1 sterling was equivalent to C$1.535.
Hematite or haematite - iron oxide Fe2O3, one of the most abundant forms of
iron ore. Chemically pure hematite is about 71% iron.
IOC or IOCC - the Iron Ore Company of Canada, original developers and operators
of the iron ore deposits around Schefferville.
LIM or Labrador Iron - both Labrador Iron Mines Holdings Limited (the
Toronto-listed holding company) and Labrador Iron Mines Limited (the operating
subsidiary) for the Labrador iron properties.
NI 43-101 - a set of rules and guidelines for reporting and displaying
information related to mineral properties within Canada.
tonne - metric tonnes of 2,204.6 pounds avoirdupois, used for current
production.
ton - short ton of 2,000 pounds avoirdupois, used for historic resources in
Canada.
END
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